Lesson learned: Time to close College Illinois

Newly appointed commissioners at the Illinois Student Assistance Commission took an important step when they began the process of removing Executive Director Andrew Davis, architect of an ill-conceived investment strategy at the commission's prepaid college tuition plan.

Now they should take an even more important step and shut down the plan.

The undeniable lesson of the sorry series of events leading to Mr. Davis' dismissal is that prepaid tuition plans don't work.

Over the long term, plans like ISAC's College Illinois can't generate enough investment gains to keep pace with tuition increases at state universities.

Mr. Davis did his best to obscure this painful reality with misleading marketing materials, risky investing moves and accounting methods that made the plan's shortfall look smaller. Crain's Senior Reporter Steve Daniels revealed all this in a series of stories over the past few months.

College Illinois was bogus from the start. It was marketed to parents as a guaranteed way of locking in today's tuition for their college-bound tykes. But there never was any guarantee.

Neither ISAC nor the state had any obligation to cover tuition payments if the prepaid plan couldn't produce sufficient investment returns to cover future tuition costs.

Plan participants are completely at the mercy of financial markets, contrary to the promotional claims of College Illinois.

It's a sucker's bet. Without a promise from state schools to limit tuition increases, they're all but certain to outstrip investment returns.

The only way to give College Illinois a realistic shot at covering future tuition costs is to restrict price hikes at state universities. That's a bad idea, no matter how tempting it might sound.

Several other states in similar circumstances have closed plans. Illinois should follow suit.

The best thing to do is to pay out what's owed to current students, refund the remaining accounts and close College Illinois.

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Over the long term, plans like ISAC's College Illinois can't generate enough investment gains to keep pace with tuition increases at state universities.